Wealth Protection in the Face of Medical Malpractice

Fifteen years into his career in emergency medicine, in the late 1990s, Mark Plaster had to decide whether to battle a malpractice case in court or agree to a settlement that would keep his financial exposure within his insurance coverage.

With a child heading to college and other bills to pay, he agreed to the $750,000 settlement.

"I wasn't going to risk my family's future," said Plaster, who also holds a law degree and is executive editor of Emergency Physicians Monthly.

Today, Plaster's other career interests, including the magazine and website, limit his practice to about one day per week. The shifts he does take are in relatively low-acuity centers, which is a self-preservation strategy after years of working in overcrowded, sometimes violent emergency departments — conditions that can lead to lawsuits, he says

Reduced, shortened, or altered careers as a result of malpractice claims can have long-term financial implications for physicians, and even those who continue to practice in malpractice-prone disciplines can face myriad distractions, research shows.

While medical malpractice claims fell substantially and then leveled off a decade ago, they still occupy a significant portion of many physicians' careers, says Richard Anderson, a physician and chairman and CEO of The Doctors Company, a medical malpractice insurer that covers about 73,000 members.

For a study with the RAND Corp., the insurer provided information from its customer database on 40,000 physicians who faced malpractice claims during the period of years that included a large spike in filings. The study found that on average, physicians spend four years over a 40-year career fighting claims, and some high-risk specialists spend a quarter of their careers defending against claims.

Malpractice awards are typically covered by professional liability insurance, but there are some out-of-pocket expenses and potentially some longer-range issues you should address, financial advisers and physicians who have been through lawsuits say.

Of course, protecting your home and personal wealth from all kinds of legal threats must be done as you begin your career and reviewed annually to make sure all your financial assets are properly titled.

But shuffling assets into a trust after a bad patient outcome or after a claim is filed in hopes of protecting assets from creditors could be deemed fraudulent.

When it comes to specific professional liability coverage and surviving a claim financially and emotionally, keep these tips in mind instead.

Review your coverage

Ilene Brenner, an emergency physician and author of "How to Survive a Medical Malpractice Lawsuit: The Physician's Roadmap for Success," notes that some insurance contracts contain language essentially mandating a settlement instead of allowing a case to go to trial once a claim has been filed.

"This can become a career issue," says Brenner, who for the book drew from her own experience taking a case to court. Cases that are settled can end up in public databases and can affect lifetime coverage limits, she says, so it's important to make sure you have the ability to plead your case in court and have access to your own attorney.